The Indian IT services sector remains cautious amid ongoing uncertainty, with companies still hesitant to make long-term commitments. This caution is mirrored in the hiring landscape, where subdued momentum persists across the services segment, even as green shoots begin to emerge in niche tech roles. Hiring in the IT services sector continued to slide, with May 2025 marking the third YoY drop in five months.
According to the latest JobSpeak Index by Naukri.com, hiring in the IT services sector fell 4.8 per cent year-on-year (YoY) and 3.2 per cent month-on-month (MoM) in May 2025, extending a muted trend seen throughout the calendar year. The latest hiring in IT has largely been need-based.
The data shared by the Naukri.com report suggests that while India’ broader job market remains relatively stable, the IT services sector is yet to regain hiring velocity. To put things in perspective, the BPO/ ITES/ CRM/ transcription segment grew by 4 per cent YoY, though it declined 1.4 per cent MoM.
Emkay Global said that the pickup in IT hiring is likely to be contingent on a sustained recovery in global tech demand, easing of macro uncertainties, and revival in discretionary tech spends—all of which lack visibility.
“Weak discretionary spending is likely to weigh on revenue growth in Q1FY26. Meanwhile, deal wins are being driven largely by vendor consolidation and cost takeout programs. The probability of a US slowdown in H2CY25 remains an overhang, potentially impacting client decision-making, and could stall both revenue recovery and hiring momentum,” the brokerage firm said.
AI/ML, finance, and entertainment drive hiring momentum
According to the report, nine of the 16 sectors indicated positive hiring momentum on a YoY basis. Amid the broader softness, demand for specialized roles in artificial intelligence and machine learning grew by 25 per cent YoY, which is the highest among job categories. The IT sector, however, witnessed a decrease on YoY basis for three out of five months in CY25.
In terms of other sectors, the BPO sector grew by 4 per cent YoY while GCC declined by 5 per cent. Sectors that registered healthy growth in May-25 on a YoY basis and propped up the index include accounting/finance at a growth of 20 per cent, media/entertainment posting a rise of 18 per cent, architecture following with 10 per cent rise and consumer durables reporting an uptick of 9 per cent. Furthermore, the insurance sector recorded a hiring growth of 6 per cent, construction was up 6 per cent, real estate witnessed a rise of 5 per cent, oil and gas/power was up 4 per cent, and hospitality/travel saw a growth of 4 per cent.
Sectors that reported a YoY decline during the month and resulted in a deceleration include strategy/management consulting (16 per cent), banking/financial services/broking (9 per cent), retail (9 per cent), telecom/ISP (8 per cent), healthcare (3 per cent), and auto/auto ancillary (2 per cent).
Now in terms of cities, Hyderabad and Kochi saw a hiring growth of 7 per cent and 8 per cent YoY, respectively, with a large portion of the growth attributed to senior professionals. Pune also grew 4 per cent, driven by a 26 per cent rise in Unicorn recruitment.
Freshers favoured
The IT companies are banking on freshers with management across large cap firms underscoring a continued prioritization of fresher hiring as a strategic lever to optimize the talent pyramid and cost structure. TCS, Infosys, and Wipro have announced plans to onboard 40,000, 20,000, and 10,000- 12,000 fresh graduates, respectively, in FY26. The fresher-first approach reflects companies’ efforts and focus on enhancing utilization, optimizing costs, and improving productivity.
Emkay Global said, “FY25 marked a recovery phase for IT hiring after a sharp contraction in FY24, although it is still measured. Companies are balancing optimism about long-term tech demand with prudence in the face of ongoing global and client-side uncertainties.”
Outlook: No clear turnaround yet
The demand environment has remained largely unchanged in recent months, with a muted start to FY26 expected as clients stay cautious about tech spending, especially on discretionary projects. Further, uncertainties around US slowdown and tariff announcements have increased, which has further dampened the outlook for IT spending and ultimately could delay a broad-based recovery in client spending.
Despite selective deal wins driven by vendor consolidation and cost-efficiency mandates, Emkay Global maintained that hiring sentiment in the IT sector remains cautious.
To conclude, the sector remains focused on boosting productivity rather than increasing headcount, and hiring activity is likely to stay muted in the first half of FY26. The brokerage firm said that broad hiring will depend on greater visibility on global tech budgets, stabilization in the US economy, and a pickup in discretionary IT spending.